commercial law essay

False advertising

Introduction

The purpose of this report is to discuss the case of George, Jan and Seaside holidays and advise the parties on their options. In general, the issues revolve around consumer law, and in some cases there is false advertising going on, possible aggressive commercial practices. There does not appear to be any criminal liability, though certainly Jan and George may be able to recover the monetary losses they suffered as a result of the false and deceptive advertising of Seaside Holidays.

Seaside Holidays and the False Advertisements in the Brochure

One of the biggest issues present in this case pertains to the false advertising within the seaside holidays LTD brochure. The brochure indicates that the hotel is located "right on the beach" and is "the ideal place for a quiet holiday" [1] . Both of the claims are false. Instead of being located right on the beach, the hotel is that located on top of the cliff with the beach approximately 300 feet below. Moreover, Seaside Holidays does nothing of the sort in providing guests with a quiet holiday. Rather, the hotel serves as a "meeting place for local youths" [2] , with the noise carrying on until the morning. Other false claims extend further into the fact that the brochure produced in 2008 indicates it has a babysitting service available. In actual fact, the service is not available and it was discontinued in 2007. Yet the new brochure does not include this updated information.

The claims above constitute as false or misleading statements as such. This assessment is underlined by the legal stipulations and regulations within the United Kingdom. According to the Trade Descriptions Act of 1968, which has been replaced with a more updated version, the Consumer Protection From Unfair Trading Regulations, 2008, false and misleading advertisements are prohibited, and companies engaging in this activity made be penalized through different avenues [3] . In addition, apart from Trade Directives Act of 1968, another law that governs misleading and false advertising concerns the EC directive (Directive 84/450/EC) that prohibits this from occurring (Misleading Advertising And Comparative Advertising) [4] .

This body of legislative framework is able to promptly inform one that a false statement is defined as "one in which a false to material degree". This definition is worded as such in order to ensure that trivial errors or possible discrepancies do not constitute as an offense in instead what constitutes as a material degree is dependent on circumstances. "For example, one may be material discrepancy seen quoted an actual room sizes may be of no consequence if it relates to the dimensions of a garden" [5] . Therefore, when a court is considering whether or not an offense has been committed in terms of false or misleading statement the court generally considers of a normal purchaser would consider this statement to be false.

Another piece of legislation that governs false or misleading advertising includes the Unfair Commercial Practices Directive in European law in which regulates the unfair commercial practices that may harm the economic interest of the consumer. Article 2-4 cover definitions and terms (Howells, et al 2008). It is article 5 through 9 which provide information about misleading and aggressive advertising. For example, Article 5 provides information about what would constitute as a fairness, while article 6 specifies what constitutes misleading actions -- article seven discusses misleading omissions and 8 and 9 review the aggressive commercial practices [6] . With this understanding, the Unfair Commerical Practices Directive is fairly straightforward in informing one that false advertising consists of the following components:

Contains false information and is therefore untruthful,

Or in any way, including overall presentation, deceives or is likely to deceive the average consumer, even if the information is correct and causes or is likely to cause him to take a transactional decision that he would have otherwise not taken [7] .

Taking the legislative requirements of the Unfair Commercial Practices Directive together with the Consumer Protection From Unfair Trading Regulations, 2008 and the Trade Descriptions Act of 1968, it is clear (1) that a normal purchaser would consider a statement that reads 'a hotel is right on the beach' to be in fact 'right on the beach', not 300 feet away on a high cliff. Similarly, if a statement in an advertisement reads, "the ideal place for a quiet holiday", a reasonable person would expect to have a "quiet holiday". Thus, the same reasonable, normal purchaser would expect the hotel to have reasonable closing hours, security and procedures to make the guests stay nice and relaxing and quiet, not like Spring Break on Cancun beach as is what Seaside offers. However, because this information was included within the brochure, it caused Gregory, the ‘average consumer [8] to make a transactional decision he would not have otherwise made.

It would not be necessary for the parties involved to prove that seaside holiday was attempting to mislead consumers. The only burden of proof would be to prove that the statement was false or misleading because the offense under Trade Descriptions Act of 1968 is strict liability. Unfortunately, this kind of misleading and false information in the travel industry is fairly common. In fact, according to research conducted by the office of fair trading, 40% of travel organizations within the UK have misleading or false claims in their advertisements -- e.g. a trip to Australia if advertised for 599 pounds when in fact the cheapest prices 891 pounds [9] . Therefore, consumers need to act diligently and research on the claims made by organisations before agreeing to use their services.

The Holiday Insurance Issue

Another issue that is involved in this case is, according to the brochure, if the trip was booked before the end of March, there would be a free holiday insurance offered her the whole family. However, after arriving in August, George discovered that he had been charged 75 pounds or holiday insurance for the family when he booked a trip in March of 2009 as the brochure indicated.

This may be considered to be a misleading commercial practice. According to the Unfair Commercial Practices Directive, an advertisement or other commercial practices may be missed leading if there are omissions and critical information that customers would need in order to make an informed decision. Specifically, engaging in misleading practices as defined as

"omitting material information that the average consumer and eat, according to context, to take an informed transactional decision, to hide or provide material information in an unclear, unintelligible, ambiguous or untimely manner, or fail to identify the commercial intent of the commercial practice if not already apparent from the context" [10] .

Now it is clear the brochure the hotel did not provide any information whatsoever about the prices for the holiday insurance offer, in particular in the hotel's ability to revive the terms at their own discretion. If this information was provided, which usually it is at least well in the bottom of advertised or brochures, it would not count as misleading advertising, but because this data was completely omitted from the brochure, it would constitute a form of misleading advertising. It is because the potential client (in this case, George) reading the brochure cannot tell, unless it is explicitly stated that the hotel had a company to revise its prices at any time. George does not work for the company and does not have a crystal ball, so he and any other customer reading the brochure would have to be informed about the company’s policies to make an informed decision. The only way they could be informed if it was written down in the brochure. The information was not there. It does seem that Seaside Holiday completely omitted this information in order to encourage customers to book with the hotel without having the full details about the company policies, namely that the $75 offered for free can be taken back once a customer bought the hotel room. It was deceitful and misleading.

In fact, what Seaside Hotel did does appear to be somewhat similar to the bait and switch tactics that are commonly found within automobile advertising. In these cases the company will offer a very low price to the customer during the detriments for a product or a service. When the customer comes into purchase that product or service they saw on the advertisement the company reveals to customers the good is not available but another is.

In fact, the available evidence in relation to the general clauses of aggressive advertising does seem to be satisfied here. According to the legal information in the Directive, there are two defining criteria that are used to identify an unfair commercial practice that is not under misleading or aggressive and can be prohibited. These two criteria include professional diligence, which is the "the special skill and care which a trader may reasonably be expected to exercise, commensurate with honest market practices and/or general principle of good faith in the trader’s field of activity" [11] , an idea that pertains to good business practices. On the other hand, the second criteria is (2) "the practice materially distorts or is likely to materially distort the average consumer's economic behavior" [12] . What this latter criteria means is that the practice impairs the ability to make an informed decision and thus cause the consumer to engage in a transaction that he would not otherwise have done. Now in this case, it is very likely that George, if he knew that before booking the hotel could change their idea at idea moment and in fact charge him for the 75 insurance, he may not have hurried to book with the hotel or booked with them at all. Yet the hotel did not tell George this. Therefore he could not make an informed decision. There is false advertising as well as prohibited behavior occurring. It may be likely that George could sue as such to recover the damages from the overall experience and to prevent this organization from making others victims of their false and misleading advertisements.

The Case of Jan and the Leather Bag

Consumers are protected from those who sell counterfeit consumer goods under the robot in the Consumer Goods Act in the United Kingdom. Typically, counterfeit goods involve the sale of goods under a brand name when it in fact is not the real thing. The Consumer Protection From Unfair Trading Regulations, 2008; all statements about goods and services must be true. For example, a seller cannot advertise a wool jacket as leather or any other eles. As the case here, Jan purchased a travel bag for £100 from her Barclaycard and it turned out later to be not leather at all but was instead made a synthetic material. In other words, the product is not match the description and also it does not have a lawful label to describe regarding the problem or damage of the bag.

There are several different laws applicable to the remedies pertaining to instances in which individuals regarding Jan case. One is under the Sale of good Act, Sale by Description S.13. SGA – Description goods sold by description must correspond to the description. Another is S.14 (2C) specific defects must be identified and S.14 (2A):" In general the customer is entitled to value for money (higher price may sometimes imply higher quality)". Consumer Transaction (Restriction on Statement) Order 1976, if the shop said the sale goods cannot be exchanged, it is offence.

In this particular case, the bag that was being sold at the hotel shop was defective, as after Jan purchased the bag, the shoulder strap on the bag was broken. The product that the seller had the right to sell was therefore defective. Jan can get her money back as such even though the company had informed her that they ''don't give refunds on sale goods' because the product was not fit for the purpose for which it was being sold. The sign of no refunds or the statement of ‘no refunds’ mean nothing really in this case. Jan can reject the bag and claim the full refund from the retailer, as she paid £100 using her Barclaycard, the retailer need to refund on her Barclaycard.

“The right to reject the goods and terminate the contract cannot be taken away by any store policy or a ‘no refunds’ sign (no matter how prominent) but there are still two situations where they can be lost:

Failure to report dissatisfaction in a reasonable time; and

Altering the goods to such an extent that they cannot be returned in the same state that they were received" (“Your Right to a Refund", 2010).

The latter two issues are not described in the case so they do not apply. Moreover, Jan had not used the bag for any other purpose than it was intended for, which is also a stipulation to be considered in the Sale of Goods Act. Therefore, she can get a refund.

Conclusion

As these cases demonstrate, consumer law exists to protect companies that may be less than honest, like Seaside appears to be. Such laws also prevent companies from victimizing customers who may otherwise have no recourse of action. There does not, again, appear to be any criminal liabilities that can be imposed on the hotel as a result of their practices, but they could be fined and would be stopped from engaging in such practices in the future. If Seaside persisted however in their approaches, then criminal liability may become indeed enforceable.

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